THE EVOLUTION OF SECURITIES

for government use by the sale of interest-bearing government
certificates of indebtedness to private investors began, the expenditures
 of governments have continually grown. The increased
 economic complexity of civilization has necessitated a
vast extension of the functions of government even in times
of peace. Today the U. S. Government, besides protecting
Americans against external invasion or domestic violence, distributes
 the mail, builds roads, inspects food products, conserves
 natural resources, carries on scientific research in behalf
of American agriculture, commerce, and industry, and performs
 for its citizens thousands of other distinct and costly
services which were often undreamt of a century ago. In this
expansion of its functions our government has been typical of
other modern and progressive governments throughout the
world.

But a still more significant need for governmental borrowing
 has arisen from the vastly increased cost of warfare. In
the terrible conflicts’ of modern times, not merely specialized
fighting men but entire populations have had to be mobilized
at an appalling expense. Although only about a quarter as
long in duration as the Napoleonic Wars, the Great War proved
in the case of England, roughly, ten times as expensive.? It is
chiefly owing to the tremendous cost of modern scientific methods
 of warfare that every great government in the world today
carries an unprecedented burden of debt, and that so many
important stock exchanges in the world experience large daily
volumes of purchases and sales of government securities.
Not only national governments but also their various subdivisions
 have likewise become accustomed to finance their
needs through the issuance of securities. In this country, for
example, our investors hold, in addition to the bonds of our
national government, the interest-bearing obligations of our
states, counties, and municipalities. In most respects these
Ta See Appendix Ib.